What is an investment?

One of the reasons many people fail, even very regrettably, in the investment game is that they play it without understanding the rules that govern it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you can avoid violating them. Another reason people don't invest is because they play without understanding what it is about. That is why it is important to unmask the meaning of the term "investment". What is an investment? An investment is a valuable income generator. It is very important that you take note of each word in the definition because they are important to understanding the real meaning of investment.

From the definition above, there are two key characteristics of an investment. Every possession, belonging, or property (yours) must satisfy both conditions before it can qualify to become (or be called) an investment. Otherwise, it will be more than an investment. The first characteristic of an investment is that it is valuable, something very useful or important. Therefore, any possession, property or property (yours) that has no value is not and cannot be an investment. By the standard of this definition, a worthless, worthless, or insignificant possession, property, or property is not an investment. Every investment has a quantifiable monetary value. In other words, every investment has a monetary value.

The second characteristic of an investment is that, in addition to being valuable, it must generate income. This means that you must be able to earn money for the owner, or at least help the owner in the process of making money. Every investment has the capacity, obligation, responsibility, and wealth-creating function. This is an inalienable characteristic of an investment. Any possession, belongings or property that cannot generate income for the owner, or at least help the owner generate income, is not, and cannot be, an investment, regardless of how valuable or precious it is. Additionally, any membership that cannot fill any of these financial roles is not an investment, regardless of how expensive or costly it may be.

There is another characteristic of an investment that is closely related to the second characteristic described above and that you must take into account. This will also help you realize whether something valuable is an investment or not. An investment that does not generate money in the strict sense, nor does it help to generate income, saves money. Such an investment saves the owner some expenses that would have been incurred in his absence, although it may lack the ability to attract some money to the investor's pocket. By doing so, the investment generates money for the owner, although not in the strict sense. In other words, investment continues to play a wealth-creating function for the owner / investor.

As a general rule, anything valuable, in addition to being something very useful and important, must have the ability to generate income for the owner, or save money, before it can qualify to be called an investment. It is very important to emphasize the second characteristic of an investment (that is, an investment as an income generator). The reason for this statement is that most people consider only the first characteristic in their judgments about what constitutes the Millat Investments. They understand an investment simply as something valuable, even if the valuable thing is a drain on income. Such a misconception often has serious long-term financial consequences. These people often make costly financial mistakes that cost them fortunes in life.

Perhaps one of the causes of this misconception is that it is acceptable in the academic world. In financial studies in conventional educational institutions and academic publications, investments, also called assets, refer to objects of value or property. That is why business organizations consider all their valuables and property as their asset, even if it does not generate any income for them. This notion of investing is unacceptable among financially savvy people because it is not only wrong, but also misleading and misleading. This is why some organizations ignorantly regard their liabilities as their assets. This is also the reason why some people also consider their liabilities as their assets / investments.